Slow-moving Brexit negotiations could end up leaving UK airlines grounded.
Illustration: David Simonds/Observer

Brexiters may not have been turkeys voting for a self-basting Christmas, but they could end up as flightless birds. That is the warning from Ryanair’s chief executive, Michael O’Leary, who sees the clock ticking down towards March 2019 with no further progress on any Brexit deal, let alone a separate discussion of the unique demands of the aviation industry. Further inertia risks leaving airlines in limbo, with millions of seats to sell on their planes and potentially no legal right to fly them over the Channel.

O’Leary has not always endeared himself to the public, and it would be difficult to imagine a sudden concern for the British people trumping the narrow business interest of his airline. Of course, the economic future of both is aligned, with the UK providing the largest national market for Dublin-based Ryanair, even though O’Leary will find himself with significantly more room to manoeuvre than his British passengers should Brexit spell the worst. Nonetheless, there are good reasons why we should pay attention to his blunt speaking now.

Ryanair has long negotiated deals with airports, cities and governments in virtually every country in Europe, and has frequently rubbed up against EU legislation. It is no fan of the European commission, the executive arm of Brussels, but it is still fully cognisant of the worth of Europe.

As an Irish airline that will remain European after 2019, it is uniquely placed as storm clouds gather. Ryanair is never shy of talking down a competitor’s prospects, but its business could survive a Brexit scenario that potentially strips rights from British carriers – even if a hiatus on flights across the Channel would be deeply unwelcome for its profits. While IAG and easyJet publicly insist their own structures are robust enough to deal with Brexit, neither would be likely to advertise fears that the companies might not be able to continue in their current form.

A Brexit lobbying paper that came to light last week again makes clear how wishful the thinking of Britain’s ministers and industrialists has been, at least in public. While free, unfettered access for airlines between the UK and Europe might indeed be beneficial to consumers on both sides, the referendum has opened up the possibility of a competitive advantage for players in France and Germany.

They are demanding that cabotage rights – which allows airlines to operate within other EU countries – be stripped from British-owned carriers that operate links throughout Europe. The reciprocal sanction – to ban access to British domestic routes for European carriers – would affect virtually no one. Once again, negotiators will need to grapple with the broader reality of the EU27’s interests versus the fate of one divided island.

For O’Leary, the British political elite appears “delusional”. A less plain-spoken verdict, but equally damning in its diplomatic register, emanated from Brussels the same day: Britain’s approach was nostalgic, unrealistic, untrustworthy.

The progress of negotiations suggests O’Leary has, sadly, been proved right in his pre-referendum warnings about how detrimental a Leave vote would be, in his sector at least. To cling on to the rights British airlines enjoy is likely to spell the opposite of taking back control; instead, access to the short-haul European market, which still accounts for most UK flights, will be granted without the power to shape the institutions that run it.

The worst-case scenario remains unlikely, as O’Leary concedes, but he still paints a chilling picture that should focus ministers’ minds – at least if they are seriously pursuing the timetable created by triggering article 50. No industry welcomes the current uncertainty. But while the public may become inured to the gradual shrinking of a chocolate bar, or the trickling away of professionals to the EU, a grounding of holiday flights could provide a vivid demonstration of the troubles ahead.

Given that bookings could be pulled months before Britain actually exits its treaties and obligations, Boeing 737s could be the canaries of a hard Brexit.

Green bonds can bridge gap between profit and clean tech

Can capital markets prevent climate change? It is a crucial question that has flummoxed politicians ever since the Kyoto protocol advocated putting a price on carbon emissions to limit their growth.

And it is timely when most scientists agree that hurricanes like Harvey have cause more devastation than they would without the added ingredient of manmade emissions.

Twenty years after Kyoto there are still efforts to create markets for carbon. Governments, the World Bank and supranational bodies such as the European Union have strived to make these projects work. Yet the ineptitude and corruption that has dogged carbon markets has probably allowed more carbon to be created.

Carbon credit markets allow low emitters to sell their spare credits to heavy polluters. The high cost of the credits should persuade the worst offenders that investment in new technology is a better route to high profits than submitting to ever-more expensive carbon credits.

Except that carbon credits are cheap and a succession of revamps has failed to make them scarce enough to encourage environmentally friendly behaviour. Most experts agree that a price above €40 a tonne is necessary to encourage a switch to lower-carbon power generation. Last year it fell to $5 a tonne, is currently just below $6 and is not expected to reach $30 until 2030.

The conclusion must be that all the intellectual capacity expended on a capitalist solution to climate change following Kyoto achieved no gain. Worse, it would appear that without carbon credits to shield corporate polluters, politicians would have come under pressure to devise a better system based on regulation.

The City has an answer in the shape of green bonds aimed companies investing in green technology or climate friendly activities. The market in green bonds is young, but it could develop into one of the main sources of funding for “good” businesses. What to do about the legacy of polluters? That will prove more difficult.

Sports Direct chairman must fight own corner

Mike Ashley tends to eschew City conventions – and next week will be no different. The Sports Direct founder and chief executive will not be attending his company’s annual general meeting, as he avoids a repeat of last year’s mild farce, when he took journalists on a guided tour of his Shirebrook warehouse in Derbyshire. It was a chastening experience, but at least it showed some accountability in the face of pressure from shareholders, politicians and trade unions to reform his business. This year, however, his chairman, Keith Hellawell, will be left to take the flak alone.

A trio of powerful City investors are expected to vote against Hellawell’s re-election but Ashley will not be there to defend him – even if he votes his stake, which is more than 60% of the business, in Hellawell’s favour.

So the chairman will be the lightning rod while the only executive who can enact real change at the company – Ashley, of course – stays away.